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Middle East replacing live cattle with expensive cuts

Middle Eastern countries are moving away from live exports and taking more high-quality processed meat.

Nic MacBean: ABC News

The red meat marketing company, Meat and Livestock Australia says in the Middle East, live imports of cattle and sheep are being replaced with high value cuts of beef and lamb, sold in sophisticated supermarkets and restaurants.

Demand for red meat in the Middle East has been increasing every year and was worth $800 million in 2013.

And MLA's regional manager Jamie Ferguson says Saudi Arabia has not only stopped taking Australian livestock, but it's also stopped taking cheaper beef cuts from Brazil.

"Now they've had a taste for better quality and consistent beef from Australia, we're even seeing things like wagyu and organics sneaking into the retail sector," he said.

"In 12 months we've seen an amazing transformation, and it's a really exciting opportunity for us."

A year in review

The outstanding story for 2013 is China where demand for red meat has grown 450 per cent.

"Over the last 12 months, China's taken beef from 32,000 (tonnes) last calendar year 150,000 this calendar year," said Andrew Simpson, manager of China and South East Asia for Meat and Livestock Australia

"Sheep and mutton, 40,000 tonnes last year, will exceed 120,000 tonnes this year. China will take 260,000 tonnes of our red meat this year, which five years ago was just a blip on our radar."

Mr Simpson says Chinese are willing to pay almost double for beef brisket.

"For years we've hit seasonal demand, where brisket has gone into manufacturing packs. But the Chinese demand has set the floor for beef brisket, and this last 12 months, we've seen that market alone has a price of $4 to $4.30 a kilo, whereas 12 months ago, those prices were dipping as low as $2.80, $3 a kilo.

"That's just a great story in itself."

It's not just China, but South East Asia is keen for Australian product.

"The Malay market is a very strong market for lamb shoulders," Mr Simpson said.

"The Singapore market in food service is very strong for Wagyu, grass fed beef.

"In the Philippines this year we'll be putting 20,000 tonnes of beef, and it's not just manufacturing grade.

"The Taiwan market, will take 37,000 tonnes of beef. It used to be the shin shank, intercostal muscle market, which went into the soups and noodles.

"The culinary sophistication of Taiwan is something to observe."

Indonesia, battling high beef prices, has taken double the boxed beef compared to last year, pushing prices down a little.

Dr John Ackerman is MLA's chief representative for the red meat industry in Jakarta.

"In the August-September period, prices in the wet market exceeded $10 a kilo. They've come down to $9 to $9.20 a kilo. There's certainly hope in the Indonesian Government, together with our collaborative work and trade, it will come down further."

Middle East manager for red meat, Jamie Ferguson, says his region has also become very sophisticated, away from live exports to high value beef and lamb.

It's taking $800 million worth of red meat in 2013.

Lamb imports are 15 per cent higher than last year.

They're very new cities, Abu Dabi, Dubai, Jedda, all sophisticated economies. These are tourist destinations for the Arab world, and travellers want to experience higher quality meat.

In particular, Saudi Arabian demand for chilled and frozen meat has grown fivefold this year, after it banned beef from US (in February 2012) and Brazil (December 2012) due to cases of BSE or mad cow disease.

"Since Brazil's ban, they tried to replace product at Brazilian prices, which the quality out of Australian didn't match. So we're seeing them demand better quality product, like Wagyu and organic beef, into the retail sector.

"So we've seen an amazing transformation in 12 months."

Korea

Despite the Free Trade Agreement signed with Korea, Australian beef will still enter next year with a tariff that is 8 per cent higher than US beef.

That's until the Agreement is ratified, and a wind-down of the 40 per cent tariff over 15 years can begin.

In the meantime, Meat and Livestock Australia is trying to market a point of difference between the two countries.

MLA's Korea manager Michael Finucane says the slogan " Hoju Chungjung Woo beef" meaning clean and safe beef, is one of the best known brands in Korea.

Beef sales to Korea rose 17 per cent in 2013, but it still slipped to fourth largest market behind China.